The People Sector vs. The Oligarchy and The Plutocracy: The most important fight in our lifetime

World Bank economists state that the global economy is so strong they are upgrading their 2018 growth forecast from 2.9% to 3.1%. Unfortunately, more than half of the world’s households do not earn enough money to pay their monthly bills. In addition, the gap between the rich and the poor in the United States, the wealthiest country in the history of the world, is growing rapidly. How can this be when the global and US economy is so strong? 

The answer is found in the concept of a “Democracy” versus an "Oligarchy" and a “Plutocracy.” A “Democracy” is defined as “control by the majority of people.” An "Oligarchy" is defined as the "control by a small group of people" and a "Plutocracy” is defined as “control by the wealthy.” Tragically, the world now has a "Public Sector" (consisting of government organizations) in which governments are controlled by an oligarchy and a "Private Sector" (consisting of large corporations) that is controlled by a plutocracy. The majority of the world is struggling socially and economically because the "People Sector" (consisting of individuals, small businesses and NGOs) is not exercising the power it has to establish a true democracy where the actions of the public and private sectors benefit the majority of citizens instead of members of an oligarchy or plutocracy.

Democracy vs Oligarchy and Plutocracy

The United States became an economic powerhouse because it was focused on establishing a democracy where the majority of households made enough money to pay their bills. It was not a democracy in the purest sense but it aspired to be a true democracy. During this period in the Country's history the middle class provided extremely high tax revenues that enabled the US government to become the most powerful in the world. Unfortunately, the US and other wealthy countries now have a growing number of households that cannot pay their bills because the oligarchy running the government has forced the country to transition from a democracy (led by average people) to a plutocracy (controlled by the wealthy). 

The Board of Governors of the Federal Reserve indicate that in 2015 an incredible 31% (76 million) of Americans are struggling to pay their bills. Bankrate completed research that found that 57% of Americans do not have sufficient cash to cover a $500 expense. My analysis using the Living Wage Index (LWI) has found that more than 50% of households in the 20 largest cities in the US cannot pay their basic bills. How can this be in the US which has been considered by many to be the global model of economic prosperity for average citizens?

The public sector, the part of the economy controlled by government, is now an oligarchy where a few select leaders and individuals (frequently through lobbyists) dictate public policies that hurt average citizens. The private sector, the part of the economy controlled by large corporations, is a plutocracy controlled by rich shareholders. This sector of society has been given greater influence than ever by the oligarchic public sector. This has led to the establishment of a “Plutocratic Capitalism” which has transferred wealth from average citizens to the rich.  I recently made a presentation to the Wharton Social Impact Alumni club on the future of the middle class and, in preparing for that presentation, was surprised to find that the ratio between CEO pay and average worker pay was 20 to 1 in 1950; 42 to 1 in 1980; 120 to 1 in 2000; and 354 to 1 in 2013. There is plenty of publicly available data suggesting that plutocratic capitalism is pushing many formerly middle class households into poverty and widening the gap between the wealthy and everyone else.

Plutocratic Economics vs.Democratic Economics

I believe that capitalism is the best economic system available and it is extremely important to have extraordinarily wealthy people in society serving as role models and philanthropists. It is also clear to me that the growing gap between the rich and the poor in the United States is not due to some evil master plan by the wealthy.  Instead, the problem is rooted in outdated approaches to analyzing data. One of the primary determinants of public policy is economic analysis. Public and private sector leaders rely on this type of analysis to make decisions on ways to grow the economy and generate greater industry revenue. However, the majority of economists are using a faulty system that I call “Plutocratic Economics” instead of the more accurate “Democratic Economics” to make policy and investment decisions. Plutocratic Economics is the study of economic trends from the perspective of the wealthy. Democratic Economics is the study of economic trends from the perspective of the general population.

Faulty Plutocratic Economics

This concept is best demonstrated by an example of a theoretical community in New York City. This community has 1,000 people in a particular neighborhood. Last year 100 of the people earned $1 million each last year on Wall Street. However, the other 900 people were unemployed and earned $0 last year. Plutocratic economics suggests that this is a very healthy community because the average income last year was $100,000 for the 1,000 people. This average income is significantly higher than the national average income so the community appears to be a wealthy neighborhood to plutocratic economists. Democratic economics suggests that this community is very poor because the Living Wage Index (the percentage of households that earn enough money to pay their basic monthly bills) is only 10%. It is incredible that only 10% of the people in this community make enough money to pay their basic monthly bills. Amazingly, plutocratic economists would call this neighborhood very wealthy and democratic economists would call it very poor.

This incredible disconnect between the assessment of wealthy and poor communities has influenced political leaders to understate the extent of poverty in the United States. The wealth of Bel Air when combined with the poverty of Watts in Los Angeles and the wealth of the Upper East Side when combined with the poverty of Fort Greene in New York City paint a picture of great wealth to plutocratic economists and significant poverty to democratic economists. The Gross Domestic Product (GDP) measures a nation’s total economic activity. It has grown steadily in the US from $3 trillion in 1970 to $18.57 trillion in 2016. This tells an important part of the plutocratic economic health of the country. However, no economists have tracked the percentage of households in the country that earn sufficient income to pay their bills (Living Wage Index) over that same time period. Consequently, the needs of average citizens who are struggling to pay their bills have been overlooked.

Democratic Capitalism Works

Plutocratic economic analysis has dominated public policy and resulted in the establishment of a plutocratic public sector that has implemented government policies that enable the largest and wealthiest companies to lobby for significant tax breaks. This has led these large corporations to pay lower taxes than local businesses, under pay workers and crush small business competition. The result has been a growing plutocratic private sector benefitting people and organizations with money at the expense of small businesses, nonprofits, households and individuals.  

Many people believe that this type of imbalance is the nature of capitalism. However, this plutocratic capitalism is abusive and ineffective because it is not based on a free market system. Wealthy corporations are given an unfair advantage which limits real competition and punishes average citizens. I believe in democratic capitalism where a truly free market system can exist because large wealthy businesses are not given unfair financial and regulatory advantages because they have larger profits to invest in lobbyists.  Democratic capitalism will lead to stronger local businesses, more jobs, lower poverty and a stronger economy. When more people move from poverty to the middle class they will add to, instead of subtract from, the economy. This benefits everyone. Democratic capitalism is ideal but is it possible?

The “People Sector” is the Answer

Most people are not aware that the current political, social and economic chaos in the United States is due to the dissatisfaction by the majority of people with the public sector oligarchy and the private sector plutocracy. The surprising popularity of the presidential campaigns of Bernie Sanders and Donald Trump were the most visible examples of the dissatisfaction with the oligarchic status quo. Unfortunately, the broken plutocratic capitalism plaguing the country is much too powerful for any politician or political party to change on their own. However, an active third sector of society has the power and influence to transform the United States into a strong democracy where the public sector is run by “We the People” as outlined in our Constitution. I call this third sector the “People Sector” because it includes all of the groups that have been marginalized by the government oligarchy and the corporate plutocracy. This sector is comprised of individuals, households, small businesses and nonprofits. Washington controls the public sector, Wall Street controls the private sector but “We” control the People Sector.

How do we empower the People Sector? The good news is that the People Sector already has the power it needs to transform the US back into a democratic political and economic system. The challenge is getting everyone to agree that any action that challenges the public sector oligarchy and the private sector plutocracy is part of the People Sector movement. This includes the "Anti" poverty, sexism, racism, guns movements as well as the "Pro" environment, health care, guns and criminal justice reform protests.  Average citizens need to come together under the People Sector umbrella and challenge plutocratic driven problems disproportionately hurting the poor and middle class like:

* The shrinking living wage job market

* Rapidly increasing health care costs

* Lack of affordable housing

* Unfair bank fees

* Rising grocery costs

* Unhealthy food products

* Increases in college tuition costs

* Costly and dangerous public transportation systems

* Environmental issues in poor communities

* High rates of illiteracy in urban public schools
* The unfair court system

* Biased lending practices

* The outdated credit reporting system

* Airline baggage fees

* The unfair tax system

* The prison industrial complex
* Access to military assault weapons
* Urban Traumatic Stress Disorder (UTSD)

There are many examples of the People Sector flexing its collective muscles but the plutocratic media has not given this sector of society the credit it deserves for making real changes in an imbalanced system. One of the most notable People Sector successes is its use of economic influence to pressure advertisers to force Bill O’Reilly off of television. His popular show was canceled because of the People Sector’s threat to not purchase from sponsors. Another example of People Sector influence is the power of the “Me Too movement” which is successfully fighting sexual assault and harassment.

Using the People Sector to fight the government oligarchy and the corporate plutocracy is the most important fight in our lifetime. Winning this fight means widespread prosperity. Losing this fight means rapidly expanding poverty, crime and environmental decay. To empower the People Sector we need your help in celebrating "People Sector Heroes." 

Please send stories of people, nonprofits or small businesses who have challenged and won a battle with the powerful public sector oligarchy (government) or private sector plutocracy (large corporations) to PeopleSector@gmail.com. We will share the best stories we receive in an effort to let people know that they can beat the system if they give it their full effort. Thank you in advance for your help in changing the world through an empowered People Sector.